Township Manager Answers Tax Referendum Questions
Lawrence Township Manager Richard Krawczun last week appeared at a forum to discuss the upcoming municipal tax increase referendum. Another public meeting about the referendum will be held on March 29 at the Slackwood firehouse.
With the people of Lawrence Township in an uproar over the impending municipal tax increase referendum, Township Manager Richard Krawczun had a difficult task ahead of him. During a forum held March 12 at the township library, hosted by the township chapter of the League of Women Voters, Krawczun attempted to explain the events leading up to the township’s current financial woes and the options that the township – and taxpayers – have going forward.
Using a detailed PowerPoint presentation, Krawczun told the audience of about 60 people about the various benefits and disadvantages of voting for/against the referendum to be held April 17. In order to balance the 2012 municipal budget, the referendum would increase the municipal tax rate 9 cents over what is allowed by the state’s 2 percent tax levy cap. If the referendum is rejected, the budget would be balanced by removing the cost of residential trash collection from the municipal spending plan and shifting that expense to homeowners by way of a new – and mandatory – trash user fee.
(Audio of the Question and Answer segment of the March 12 forum can be listened to from the media box at the right.)
Krawczun is scheduled to repeat his budget presentation and answer questions about the tax referendum again next week during another public forum that will be hosted by the Colonial Heights Civic Association at 7 p.m. on March 29 at the Slackwood Fire Co. firehouse at 21 Slack Ave.
“If the referendum is approved, taxes will go up by 9 cents more than the [cap] permits. If the referendum is disapproved there will be a need for a user fee charged for residential property trash collection. The advantage of the referendum is it is tax deductable [whereas the trash user fee is not],” Krawczun said at the March 12 forum in response to a question about the consequences of the referendum.
If trash costs remain within the municipal budget, those costs are shared – through the collection of municipal taxes – by both homeowners and commercial property owners, even though commercial properties do not benefit from the trash collection services. In the case of a trash user fee, only those who receive the service – homeowners – would pay.
The 9 cents – which would be in addition to a 5-cent increase already built into the 2012 municipal budget – would raise the municipal tax rate to $0.98 per $100 of assessed property value and add $144.75 to the 2012 municipal tax bill for the owner of a home assessed for tax purposes at the current township average of $160,828. By comparison, it has been estimated that the trash user fee would cost homeowners about $336 per year.
“In effect, you’re not giving voters an alternative on April 17. You’re saying, you’re either paying a tax that’s greater than what the state mandates or you’re paying a user fee – but you’re paying regardless,” one audience member said.
Krawczun pointed out the various steps Lawrence Township has taken in recent years to cut costs, including reducing staff, sharing public works and health department services with neighboring municipalities, increasing recreation user fees, privatizing some services and refinancing debt. In order to “accomplish the same thing as the 9-cent tax increase” a total of 36 municipal employees, including police officers and emergency medical staff, would need to be laid off and such cuts would have a devastating effect on township services, he explained.
“Raising taxes is offensive. We understand that the cost of your taxes is high enough. But we don’t do this from afar and impose this,” he said, assuring audience members that he and township council members carefully considered all the options and, as township taxpayers themselves, will feel the effect of any tax hike or user fee.
As part of his presentation, Krawczun talked about how the township’s tax base has declined by over $167 million in the last five years due to successful tax appeals by commercial and residential property owners, including a loss of $38.3 million during 2011.
“If we were to apply the 2011 tax rate against just the loss of ratables, there would be another $1.4 million in income…That’s the impact of the drop of ratables,” Krawczun said.
He also spoke about how the township could use money from its surplus fund to balance the 2012 budget and avoid the need for the additional 9-cent tax hike that is the subject of the April 17 referendum. But to do so, 97 percent of the surplus fund – or $4,870,000 – would need to be used as revenue for this year. Leaving so little money left in the surplus fund would create even worse budget woes in 2013, he explained.
“If we delay action until next year, the problem will be much worse,” Krawczun said.
Krawczun discussed the decline in state aid the township has experienced in recent years and elaborated on the efforts the township has made to curb costs, such as reducing municipal staff 10 percent over the past five years and not offering raises to employees in 2010. He commended public works department employees for their willingness to work across positions, as well as the township’s volunteer fire companies for their dedicated service.
Some in the audience were impressed by Krawczun’s presentation.
“I commend you for putting this together,” one audience member said. “For me, it was an eye-opener.”
Resident Diane Marshall agreed about the importance of staying informed. “The referendum is going to be very complicated to read. People are already very upset about the tax increase, and then if you can’t understand the referendum, how are you going to vote?”
One woman who said she was born and raised in Lawrence admitted that she had a “change of opinion” after attending the forum. “We can’t itemize the trash collection fee on our taxes. So that’s a major selling point (for the referendum), being able to have it as part of the tax rates. I was glad I came.”
Another audience member addressed Krawczun, saying, “If I was a CEO and I showed the numbers to my board of directors that you showed, I’d be fired like that. Now having said that, I came in here very disappointed, but I’m very impressed with the way that you’re keeping expenses down.”
“You’re exactly right. If I was in private business, we would be making some major changes. The difference is in the private sector you’re told what you can’t do. In the public sector, we’re told what we have to do. And that means I get to a point where I can only reduce till I get to the floor. Once I get to the floor my hands get tied,” Krawczun said, explaining how state law requires the township to maintain certain staff positions and provide specific services that cannot be cut.
State law also means that the township cannot collect property taxes from some of the largest institutions in town such as The Lawrenceville School and Rider University.
Krawczun ended the night with a pledge that he would continue to do everything he could to keep taxes down in the future, even when the economy improves.
“My promise to you is that I will give you my 100 percent professional effort to make sure that I follow my fiduciary responsibility in giving every resident of this town the best service at the least amount of taxes,” he said. “You have my utmost promise that I will leave no stone unturned and I will hold our employees’ feet to the fire so that you get the best service at the best cost.”
- March 14: “Trash ‘User Fee’ Would Be Mandatory If Tax Referendum Is Voted Down”
- March 8: “Usage Rate for Sewer Bill to Increase 15 Percent”
- Feb. 23: “36 Layoffs, Recreation Cuts Rejected by Town Council”
- Feb. 9: “Details of Tax Referendum, Other Alternatives Given”
- Jan. 18: “Township Manager Presents Proposed 2012 Budget, Recommends Referendum to Exceed Tax Increase Cap”